Presented by Julie Caspar

Cris Wildermuth, Ed.D., SPHR Assistant Professor Drake University Adult Learning & Organizational Performance

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Julie Caspar President, HR Hotline Ankeny, Iowa (515)

Welcome Defining Compensation Business Strategy and Compensation Philosophy Compensation Specialties Additional Strategic Considerations Cases End Session

TRUE or False: – Compensation is cash provided by an employer for services rendered Answer TRUE

TRUE or False: – At the beginning of the 20 th century the focus of compensation was pay for work; by the end of the 20 th century the focus of compensation was more on pay for results. Answer TRUE

At its most fundamental level… Compensation is pay for work

Compensation Evolution Domestic Competition Global Competition Pay for Work Passage of Fair Labor Standards Act (1938) Benefits (Compensation) Drive Performance Longer Term Strategy Achievement & Pay Equal Pay Act (1963) Equity Merit Ongoing Legislation e.g. Lilly Ledbetter Davis-Bacon Act 1931 Pay for Results Total Rewards American Compensation Association (1955) Work-Life Balance Development

ACA American Compensation Association WAW WorldatWork

TR Model: Created by WorldatWork © 2007

Cash provided by an employer to an employee for services rendered. Cash is comprised of …. Compensation is …

Base Pay Wages Salaries

Variable Pay Bonuses Incentives Stock Options “At Risk”

Focus of compensation today? MARKET-BASED

INTERNALLY EQUITABLE

PERFORMANCE DRIVEN

Where Compensation and the Business Imperative Meet

Vision & Mission

Goals

Strategically Aligned Compensation Objectives Legal compliance Cost effective Internally, externally, and individually equitable Drives performance and results

Compensation Philosophy

Seniority Basis Across-the-board raises Pay scales raised annually Industry comparisons of compensation only Holiday Bonuses No raises for length of service No raises for longer service poor performers Market adjusted pay structures Broader industry comparisons Bonuses tied to performance results Compensation Philosophy Continuum Entitlement Performance Mathis, R.L. & Jackson, J.H. (2006). Human resource management 11th edition. Mason: Thomson South-Western.

What is your compensation philosophy like?

Compensation Goals

Market Positioning

At Market Compensation programs are valued within close proximity to market. Lag Compensation programs are at an affordable level for organization. Takes advantage of abundant supply of potential employees in a loose labor market. Lead Paying for higher qualified, more productive workers by positioning pay above market.

Compensation Mix

Performance Based

Alignment

Decision Making

Communications

Changes

Compensation Philosophy Should include….

Pay level position against competitors (or market)

Amount of fixed vs. variable pay

Balance between external vs. internal equity

Link to business strategy

At what market level does your organization position your compensation programs?

Surveying the Market

International Sales Executive General o Base o Incentive Compensation Specialties

Additional Compensation Considerations

Competency Based Pay

Individual vs. Team Rewards

Pay Openness vs. Secrecy

Equity

Job Leveling / Pay Structures

Compensation Programs “Fitting” into the bigger picture

Research milestone achievements Case 1

Case 2 Power Company Skilled Worker Retention

Take Aways

Compensation is cash provided by an employer to an employee for services rendered. Compensation is one of multiple variables of what may drive a business strategy based on the Total Rewards Philosophy.

A clear depiction of company mission, vision, and goals need to be made before a strategic compensation plan / program can be developed. A compensation philosophy is critical to the successful alignment of the business strategy.

Organizations need to decide whether their compensation programs are to be more entitlement or performance based and how either will advance the business strategy.

There are multiple and various considerations to be made in determining compensation programs that will ultimately lead to business achievement.

Julie Caspar President, HR Hotline Ankeny, Iowa (515)

Presenter: Jennifer Soma Title: Career Development and Happenstance Date: December 12, 2012 Time: 12:00 PM - 1:00 PM CST Register: